"The drama going on in the U.S. Government is rooted in hatred and bigotry. Many white people just don't like a black President. It's never talked about openly. But that's really what's going on. Our Country is ripped apart by hidden racial prejudice. It won't end."

Mr. President, step up to the responsibilities of your office and put forward a balanced plan (tax increases and entitlement reductions) for the economic future of this country, lead (hopefully you can) bipartisan consensus, and claim personal victory on the unified outcome. Your performance in the next few short days will determine your legacy. Stop the pimp walk and man-up.

If Social Security is self funded then how come the CBO estimates that today's seniors will receive on average $100,000 more than they paid in taxes, today's middle aged folks will break even on taxes and benefits, and today's youth will have to pay $100,000 more in taxes than they will ever receive in benefits?

If MoveOn.org says that Social Security is self-funded and "off the budget", who are you to disagree?

I would absolutely love to hear the rational argument about how a program that takes money in from me now, uses that money to pay for pet projects, and then promises to pay me back later is "off the budget".

This is exactly why Democrats resist privatizing Social Security: if you attached a name to every dollar that comes in via Social Security, they would have to take someone's money to buy their votes. With no names on the money, only the intelligent realize that they will get probably the worst investment return on history: pay in a dollar, get back 75 cents.

Ask a Republian politician what about Medicare or Social Security they want to cut... They're just as protective as the Democrats. The problem the parties have is that the only "handouts" Republicans care to see cut, i.e. those for the poor, don't add up to much at all in reality. So cutting the misleadingly labeled "Obamaphone" for example, or the arts, or science, or food stamps won't make a dent. "You have to start somewhere", the conservative rank and file will say. But it just proves the conversation Republicans are having right now with the President and Democrats isn't how do we fix the deficit. It's how can we ensure the rich get richer.

I wish someone would come straight out and ask the Republican brass which parts of Medicare and Social Security should be cut so that they'll finally, after 12 years, quit padding the pockets of the wealthy. I'm sure they'll dance around it and say everything has to be on the table and kick the can some more.

Their answer to fudge the numbers and modify how inflation gets calculated was certainly a step in the right direction. The Democrats should have jumped all over that and said, "OK, if that's what it will take for you to give in on taxing the top 2% so be it. We'll give you your wish to reduce Social Secuirty payments for the elderly in exchange for higher taxes on the super rich."

Just out of curiousity, Lanna - what is your solution to the debt issue? Keep in mind that countless economists and government budget officials have said raising taxes on the rich will, at best, account for five percent of the total future shortfall.

It's time to finally have it out with the lunatics of the far right. For too long the GOP has been the equivalent of a hostage-taker willing to let the hostage die rather than surrender, and the Democrats blinked rather than take the risk. Time to fight fire with fire - you cannot defeat fanatics by trying to reason with them.

The Economist fails us by framing the "fiscal cliff" as a simple battle between two parties. America has showered the wealthy with Bush's largesse for ten years; however, the "trickle-down" from this regressive taxation has not been a thriving economy but an unsustainable growth in inequality, political corruption, and corporate exploitation. This is a contest between crony capitalists' lust for money and America's need for rational economic policies and sound government, by and for the people instead of moneyed interests.

Instead of parroting the latest GOP trope, why doesn't TE expose the politically suicidal details of the GOP's "plans" and the junk status of its "economics"? 99% of Americans will not forever be fooled into voting against our interests by the propaganda of the 1%.

Class warfare is a beautiful thing indeed. You bash The Economist for presenting the fiscal cliff as a battle for two parties, and yet at the same time you split America into two camps: 99% and 1%. You'd be surprised how many jobs the 1% supports. You'd be surprised how important it is that our president stop speaking of America in two parts: we succeed together, and the sooner this 1% scapegoat stuff goes away, the better.

Bring back the draft! That's a way to united the classes!
Or mandatory civil service like Germany. Unwanted mandatory civil service for 6-9 months would lower the divide between the classes in a heartbeat.

I know the military service is disappearing but I think the Civil Dienst might still be around.

Yeah, quit focusing on the wealthy you classist. It's important that middle class wages continue to shrink while a smaller share of Americans control a greater share of the wealth. Without multi-millionaire CEOs there woudln't be jobs. Be more Republican and focus on race and sexual orientation.

Yep, all those "how would like your burger and fries? (Sir or Maam)" jobs. For the rest, all those workers in Shenzhen thank you 1%ers for their jobs. Those are the folks who forgot the "we succeed together", not the working class folks. There is indeed class warfare in the country, only its not the working people doing the warfare. The scapegoats have no one to blame but themselves.

You'd be surprised how much of the wealth of the 1% has been extracted from the 99% by exploitative crony capitalism. Class warfare is surely beautiful for the oligarchs as long as they are winning it so easily. But enlightened self-interest dictates stopping short of killing the goose that lays the golden eggs. The radical GOP is quite ready to kill the goose rather than accept a less-regressive tax system.

It seems to be working. Some 29 Democratic senators have signed a letter rejecting any changes to Social Security. Fourteen have also ruled out changes to benefits under Medicare and Medicaid. Both Harry Reid, the leader of the Democratic majority in the Senate, and Nancy Pelosi, the leader of the Democratic minority in the House of Representatives, have spoken against cuts in benefits.

That's a bit frightening. At least we were on the side of rationality and reason before this, now the Republicans can claim that the Democrats are just as stubborn when it comes to cutting spending. Sure, cutting spending isn't something they would necessarily love, but a strict solid pledge like this is going to phase them out like the Republicans are getting phased out, as a party unable to be flexible. It's not as bad as the Grover Norquist Pledge.... yet, only a tad over half instead of over 90 percent, but this represents a dangerous threat to the Democratic Party, and one that needs to be stamped out of existence before it grows. Sure, working to try to ensure that these programs remain intact for the people is good, but a pledge like Norquist's but for cutting spending this time is a recipe for disaster. Or at least that's my take on it, a moderate left person by American standards.

Except the letter and statements were not characterized as a pledge in the sentence. From the article there is no sense of the strength of obligation/vow/commitment asserted. A link to the letter would have been helpful if there is some attempt at establishing equivalency with the Norquist pledge.

Otherwise there are some quick measures to try in the short term.

For medicare at least, it may be worth allowing the program to negotiate drug prices to see what savings could be achieved first.

For social security, it may be worth getting rid of that loophole that caps income taxed for social security contributions.

That's true, it's not a massive policy decision like Norquist's pledge, but it's still a bit irritating when one party tries to go on the "No surrender!" type Negotiation style. Maybe I'm overreacting, probably am, but still after seeing the horrible nightmare that the Norquist Pledge did to the Republican Party, and to the nation, a solid "Line in the sand" type thing causes some anxiety. But then, it's a lot harder for the Democrats to maintain such a pledge, got more ideological diversity.

Certainly the proposals for medicare and social security are good ones, hopefully they will be adopted.

The thing is, if you take the stances to extremes, the two sides come off looking quite differently:

Norquist ends up defending loopholes and rates for a small minority of Americans, typically deemed affluent and even elitist

The pro-Medicare and Social Security Democrats end up still appearing to defend what 50 to 70% of Americans support, many strongly

I don't mention Medicaid because I am uncertain of the strength of support there (may be seen as a program for free loaders?).

I say this as a Republican, and one who remembers when the AARP and other types of "gray panther" groups came out in force, lke in the 1980s (or even 2010 if some of the elderly were reacting to perceived threats to medicare by Obamacare policy proposals).

Our memories are short, but the interests of the elderly and the soon to be elderly can get some strong representation that easily outdistances what Norquist canrummage up.

So just a straight up assessment of the politics here.

I personally expect rises in personal payroll tax contributions and means testing in the future. Also a hefty

rise in that cap for social security (say to 300K of salary). Payroll tax increases were executed in the 1980s and we shouldn't be surprised about a repeat.

The matter at hand is legislation to effect spending and taxes as of January 1, 2013. The US President has *not* offered up spending decreases for that legislation, not $400B, not any at all. He has proposed additional spending of $50B. The offer to *talk* about spending cuts on Medicare some time in the future is risible.

Social Security is off budget, so is properly not a part of deficit reduction legislation. Social Security and Medicare do need adjustments, but these are big problems which must be left to the next Congress. All a lame-duck Congress should do is get us past the so-called "fiscal cliff" to give the next Congress ample time to work out the details.

Social security revenue from payroll taxes does not cover social security outlays, and has not for the last two years. SS, one part of the government, gets over by collecting 'payments' from another part of the government and thus lives in part on continually borrowed money like all the rest. So of course it must be on the table.

You don't understand how Social Security works. Social Security has a large surplus now, because it has been saving in anticipation of the retirement of the "babby boomer" generation. Now that that has started, the surplus is being spent down. This is normal — an expected consequence of changing demographics. Social Security has always needed periodic adjustment to take into account changing demographics, and it will continue to do so, but this is entirely separate from the problem of the defecit in the regular budget.

I'll say it again, Republicans lie about the past and Democrats lie about the future.

"Social security revenue from payroll taxes does not cover social security outlays, and has not for the last two years. SS, one part of the government, gets over by collecting 'payments' from another part of the government and thus lives in part on continually borrowed money like all the rest."

So who benefitted from all those extra regressive payroll taxes ordinary people had to pay over the past 30 mostly Republican dominated years? The less well off were promised that huge regressive tax increase would "save Social Security." You are implying they were robbed, but are unwilling to say so. Who robbed them?

"Social Security has a large surplus now, because it has been saving in anticipation of the retirement of the "babby boomer" generation. Now that that has started, the surplus is being spent down."

Those saying "the government owes me money" had better have a clear indication of whom owes the government money to pay it. Over and above the higher taxes and reductions in other program needed merely to stop going further into debt, not pay it off.

The boomer generation put lots of money into the Social Security trust fund. Then took it out and spent it on itself, leaving behind IOUs. It is not looking for someone to pay a second time. Who should that be and in what form? Those who are 54 and under and have "time to adjust?" Higher taxes -- on future wage earners after you have retired? Cuts in infrastructure and education funding?

What do the Republicans and Democrats in this argument have in common? In general, they are members of Generation Greed. The Republicans want to shift the entire cost of what they have done to the poorer generations coming after. The Democrats want to pretend there is no problem, and then pretend that the same result is due to "circumstances beyond our control."

If by that you mean SS has a large amount of funds, previously collected, now sitting safely in an account then such is a fantasy, a cruel one for those believing in it.

Those "surplus" funds were long ago loaned from the left-hand to the right-hand and joyfully *spent* by the right-hand on Veterans benefits and pensions, on bridges-to-nowhere, on the half million US postal workers, on GM/Chrysler/FannieMae/ FreddiMac/FHA ($200B) never to be repaid, on Medicare-Medicaid ($800B/year). That money is gone.

Today, the right hand repays the left, i.e. the SS fund, *only* by means of borrowing yet more money via Treasury Bills, or printing more money. The consequence of this history will be felt by SS beneficiaries not in 2037, but the moment the US finds itself unable to borrow more, like Greece.

Any money paid in taxes is money that might create a job. Income tax isn't special in that regard. Returning to the old rates isn't an increase just because Republicans say it is. Going off this 'cliff' may be the most sensible of the alternitives.

The Economist never seems to get around to pointing out that what it calls "raising taxes on the rich" means simply returning them to Clinton-era rates. Instead, I think they want the impression to be that taxes for upper brackets are about right the way they are now, and that "raising taxes on the rich" means being punitive.

From there we go to the fringe media's touting of Obama the Socialist punishing success and all that twaddle. I think only the most ideological media outlets are going with this view of the situation. Even many of the wealthiest 2 percent themselves now agree that they could chip in more in taxes without affecting jobs or innovation. Republicans like to cite a negative effect on "small businesses," but if you're in the group that is going to see its taxes raised, you need to update your description of yourself.

So I think you have it completely backwards; "more and more Republicans grudgingly accept the prospect of higher taxes"? The House Republican leaders counteroffer to Obama is the extension of all Bush-era tax cuts, considerable changes to Medicare and large cuts to mandatory and discretionary spending. Doesn't sound like they're doing any heavy lifting to me.

No, net rates will be higher than Clinton and the net tax will be much higher. There are additional taxes coming online Jan 1 in addition to the expiration of the Bush rates. The top income rate will be close to 43% do to health care taxes, a good part of dividends will be taxed as ordinary income, the estate tax will jump parts of the estate from zero to ~50%.

And there is *no* change to Medicare or cuts of any kind on the table for Jan 1 *legislation*.

Not sure exactly what you're saying, but raising the top income tax rate to 43 percent, taxing dividends as income, and increasing the estate tax(?)--these are all fine with me. If the rich think it's punitive, well, they need to tighten their belts like the rest of us. What will get people back to work is creating demand for goods and services, not throwing money at "job creators" [laugh track].

I would simply like to get agreement first on the facts of the negotiation, and then perhaps move on to what people are fine with, or not. The facts are *not*, as posted above, that net tax rates or net effective tax rate will return to the "Clinton-era" rates, but will be substantially higher.

As to what I'm fine with, I'm fine with keeping a job for myself and others close to me. Along that line, so far in my career I've noticed not a single employer cutting pay checks was poor.

I subscribe to the following:
1. You cannot bring about prosperity by discouraging thrift.
2. You cannot strengthen the weak by weakening the strong
3. You cannot help the poor man by destroying the rich.
4. You cannot further the brotherhood of man by inciting class hatred.
5. You cannot build character and courage by taking away man's initiative and independence.
6. You cannot help small men by tearing down big men.
7. You cannot lift the wage earner by pulling down the wage payer.
8. You cannot keep out of trouble by spending more than your income.
9. You cannot establish security on borrowed money.
10 You cannot help men permanently by doing for them what they will not do for themselves.

"What will get people back to work is creating demand for goods and services, not throwing money at "job creators" "

What, like the 2008-2009 stimulus did? Unlike the some ambigous spending at the electronic store for christmas which might end up in China, the family with income of $250K/year in say, expensive NJ, will likely react to a tax hike of ~$20K as follows:
i) Cut out baby sitters and nannies. A part time or full time job immediately gone.
ii) Cut out the monthly yard care guy. Another job gone.
iii) Fire the tutor for the kid not doing so well in school.

There's the belt tightening for you by the "job creators". Now the nanny, the yard guy, and the tutor will have tighten some more. [laugh track].

Hillary Clinton 2016! Can we get there soon enough? I bet those 18 million glass-ceiling voters are LIVID right now.

Boehner is still waiting for (a polite return) phone call from Obama on his offer. We can see from the above photo that there is still nothing on the table. As a result, the Speaker has sent the majority home because there is nothing for them to do.

There is a deal on the table. Taxes return to their prior levels. The military gets cut too. And there is at least a little restriction on health care spending on today's seniors, not just massive cuts for tomorrow's.

It's called the fiscal cliff. And I say bring it on, because the future and anyone who live with is likely to be sacrificed in any other deal to a greater extent.

I've been listening to the same people say "we've got to stop borrowing ourselves to disaster" and "we can't stop borrowing or it will be a disaster" for two years. The same person. In the same speech.

Now they say Wal-Mart will be offering home equity lines of credit so that people earning Wal-Mart wages will be able to "liberate" and blow whatever money they have left to keep the game going a little while longer. Why? Is there too much left?

Now they say Wal-Mart will be offering home equity lines of credit so that people earning Wal-Mart wages will be able to "liberate" and blow whatever money they have left to keep the game going a little while longer.

You do realize that the fiscal cliff is the government blowing whatever money they have left. These people do not need higher taxes, and they sure as hell will have a harder time getting themselves out of debt if their rates go up.

There are serious issues with all of this and the road forward is fairly clear. The problem is the effective corruption of the political process. It seems the everyone in politics is so arrogant that they actually believe they have the one true answer and therefore the single most important outcome is to be reelected. They are kidding themselves and with the short term-ism and entitlement mentality of the American voting public they are allowed to get away with it. The tragedy is we all have to wait for an unmitigated disaster for anything to get done. And people wonder why companies aren't hiring?

"Entitlement reform" is a totally bogus issue. Healthcare in America costs twice its European counterpart due to providers' and private health insurers' greed, not government largesse. How about devoting some of the USA's bloated military spending -- billions and trillions over time, more than the national budget en toto of Spain, most often for weapons that don't work and personnel that don't fight -- to extending quality healthcare to most Americans, still more fantasy than reality. "Reforming" Social Security is even more a red herring. The program is solvent through 2037, when the elderly population begins to decline. It has nothing whatsoever to do with yhe fiscal crisis except that reactionaries have wanted Social Security killed ever since FDR died. This article is an insult to readers seriously concerned about budget and policy reform in America.

"Social Security’s expenditures exceeded non-interest income in 2010 and 2011, the first such occurrences since 1983, and the Trustees estimate that these expenditures will remain greater than non-interest income throughout the 75-year projection period."

Your take on Social Security is an insult to people that actually understand the program.

Please, for the sake of the idiocracy that America is becoming...do your homework (and no, MoveOn.org/Huffington Post do NOT qualify as legit sources) before you try and speak intelligently on an issue.

Perhaps you are counting on the SS "surplus" on paper to make up the current shortfall in income as reported by the SS actuary. That money was long ago spent as loans to other government operations, and now is repaid to SS *only* by means of borrowing yet more money via general government debt. The fact that you might consider SS solvent on because you've walled it off on a piece of paper change not at all the total obligations, and deficit of the federal government.

Becoming indignant will not change the fact that, should the US government find itself unable to borrow, SS will fail to be able to fully pay its beneficiaries. That will occur not in 2037, but the moment the US fails to successfully issue more debt.

Odd that neither "side" has mentioned that there is no reason we should be focusing on the debt. There are 8% unemployed, 1/3 of homes underwater, a trillion in student loan debt, underutilized capacity - an economy running way below it's potential.

Repeal this absurdity known as the Budget Control Act, and let's steer the focus back to fixing the economy. By the way, if you're so concerned about healthcare costs, then why don't you ask every other country in the world why we pay twice as much per capita as them for healthcare? Hmmm.......

The cuts to entitlements that have been proposed (e.g. indexing Social Security to CPI inflation or raising the Medicare eligibility age) would not take effect immediately. Their impact would be to bend the curve of those programs to keep them fully solvent in the long term.

Where will the money come from? Entitlements are financed by payroll taxes, not income taxes. If payouts exceed revenues, and there's nothing in the trust fund to make up the difference, then the program is insolvent.

This will happen for Social Security by 2037, and for Medicare by 2024.

Check out the Trustees report. Why is it that every year Medicare parts B and D have no projected shortfall? Because the government guarantees the payments. There is no reason that SS or Medicare need to be tied to payroll taxes or any other kind of tax. I would recommend suspending FICA taxes completely for the time being, until we see substantially lower unemployment.

The reason they're tied to FICA taxes is that they're billed as social insurance programs, which is critical for maintaining their broad appeal. Remove that link, and they're naked transfers, and those sorts of policies are far from universally popular.

Well.. there may be some truth to that notion, although I doubt there has been much polling on such a question. In any case, we're talking about a temporary suspension. The function of taxes is to regulate demand and check inflation, not to finance spending.

I don't understand why "debt" is in quotes. I know we have a fiat currency and its not tied to any physical asset but there is a price for issuing more money. Inflation will be a concern for the future and as our interest rates are so low, I would rather not encourage it.

I get the impression you are advocating running up the debt and then defaulting? I am presuming this from "debt."

Debt is in quotes because it's a fairly misleading way of thinking about it. The national debt is the accounting record of all of the money that the government has spent into existence and not yet taxed away. Debt implies that it needs to be paid back.. but if we were to do so, you and I would have no money.

Also, there is no reason we need to issue treasuries in the first place to raise money - it can simply be created as needed. But people want to earn a little bit of interest on their savings, so we sell them a bond.

There is a price for issuing money, I am absolutely not advocating that we "run up the debt and default". But, we have 8% (at the very least) of our population sitting around looking for work. We are under 80% capacity utilization. The money supply is still trillions of dollars below what it was before the crash. Interest rates are at zero. Does this sound like "too much money chasing too few goods"?

The people are ready to work, the businesses are ready to grow, but the dunces in Washington can't pull their head out of each other's asses long enough to connect the dots.

No. Some things are your things, and some things are my things. When I make things, like money, it is not our things, it is my thing. You can make things too, and then they will be your things. Your things and my things, but no "our" things. There is no our things. People who say our things really mean they want my things to be their things. But they can not have my things.

And the thing about debts is that they have to be paid with things. But will they be paid with our things? No, there is no our things. They most certainly will be paid somebody's things, but not by everybody's things. And so that debt is those people's debt, because those people's things are their things. And I have only so many things.

Are you for real? There's this principle called limited resources, unlimited wants, you know, scarcity. Long story short, economics.

A fiat currency is a means of exchange, it does not mean that we have unlimited things because we can alter the means of exchanging those things.

A means of exchange, money, isn't just little green pieces of paper, it's the means to exchange them for other things, and you cannot raise the amount of things that can be exchanged for money by increasing the amount of money for which they are exchanged.

I'm not sure that I'm following your point.. do we or do we not have millions of people sitting around ready to work? Let's put them to work. Look at the output gap, our economy is operating way below it's potential.

Exactly.. and if you were to do so, you would gradually be eroding the wealth of the private sector. This is what happened with the Clinton surpluses - people ended up taking on massive levels of debt just to maintain the standard of living they were used to.

The output gap is not something you can "look at". Potential's not a measurement, it's a conjecture. This is why data shouldn't just be left laying around, you get people saying things like "inflation is..." in all seriousness.
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That's not what your claiming however, it's that the multiplier on G is not just greater than 1, but that it's so high that government revenue rises above any increase in spending. And I know precisely where your getting it from because it was one of the dumber ideas of some of the Bloomsbury kids. How you found that except from a textbook on the history of economics though is beyond me. All it takes to disprove that is that there is sovereign debt above 100 percent of GDP.
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This is getting Keynesianism terribly terribly wrong. Macroeconomics is essentially micro plus taking into account the fallacy of composition. Per the fable of the bees, an increase in savings may not result in a net increase of savings. And a Keynesian explanation of recession is everyone trying to sit at the back of the canoe (saving) at the same time and pretty soon you're not in the back of the canoe anymore. But this is true in the other direction as well, with consumption. Too much money chasing too little things. After that, the government decided the lesson was that people should sit in the front of the canoe, and of course that promptly flips over into stagflation. Which is what you're advocating.
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You look at the decline in GDP since '06 and say there's a recession, but there's no reason to extrapolate straight out at trend at call that potential.
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And good reasons not too. Assets, particularly real-estate, were over-valued and there was clearly malinvestment which means we may have been over potential. Technology might be increasing more slowly (also not a measurement, a remainder) per the stagnationists. Population growth is slowing, while the population is aging, not only reducing trend growth but also undermining our ability to finance our current liabilities. Structural problems like increasing regulation or decreasing labor mobility or skill mismatch between workers/employers are also probably increasing.
-do we or do we not have millions of people sitting around ready to work?
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What the hell is those people's marginal productivity!? You need to know that! Is it possible that, for a great many of those people, it's less that their marginal advantage of working/minimum wage - FICA - Obamacare fine - Regulatory burden - Employee cost. Certainly. There are also "now hiring" signs, which shows that to a large extent unemployment is structural. Structural unemployment is probably higher than it was before. Our under 8 percent employment is high historically, but it's lower than the persistent unemployment of much of Eurozone.

Your post is very muddled and tangential.. I'll to try to piece together what I can out of it.

"But this is true in the other direction as well, with consumption. Too much money chasing too little things. After that, the government decided the lesson was that people should sit in the front of the canoe, and of course that promptly flips over into stagflation. Which is what you're advocating."

No, I'm not. The savings rate has been pretty constant for the past couple decades. I think you're referring to the paradox of thrift here. People are not spending enough to spur growth in the private sector right now (no job, paying down debt, etc.), the only possible source of demand is from the public sector (either by spending or by lowering taxes). I really don't know how you can look at our economy and say we have too much money chasing too few things with millions not working, near-record levels of private sector debt, etc. That's pretty mind-boggling.

"What the hell is those people's marginal productivity!?"
I'm not sure, but I have a feeling they are more productive when they are working as opposed to sitting on the couch collecting unemployment benefits? Spare me the b.s. about the skills mismatch, the number of job openings in the economy is still down by more than 25 percent from its levels in 2000.

These aren't some mystical conjectures about what we could be doing.. there are over 10 million people not working, not producing anything. That is an economy operating below it's potential - this isn't rocket science.

the only possible source of demand is from the public sector (either by spending or by lowering taxes).
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Where the hell do you think the public sector gets money! To get the money to spend it must raise taxes. It can borrow money now, but then our debt will go UP, and taxes will have to go UP later.
-but I have a feeling they are more productive when they are working as opposed to sitting on the couch collecting unemployment benefits
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Nobody's saying that unemployment is good. The question is why is there unemployment? You're saying that the government should spend more money to lower unemployment- how do you not see your example of government spending is the government paying people to be unemployed!? There's no way that you can then go on to say that it's non-structural by saying they're higher than ZMP. There's clearly a marginal cost for them to employment.

"To get the money to spend it must raise taxes. It can borrow money now, but then our debt will go UP, and taxes will have to go UP later."

No, they won't. We would raise taxes at the point where we see too much aggregate demand/runaway inflation. We have run deficits for most of the last century, this obsession you have with raising taxes to fund spending is inapplicable. Look at all the times we have come close to balancing the budget (or run surpluses) over the past 50 years, they have been followed almost immediately with recession.

The government pays out unemployment benefits automatically, which is an extremely useful counter-cyclical stabilizer in a recession. By continually running these deficits we have seen something of a recovery, but more is needed. It would be more effective to pay the unemployed to DO something than to sit around waiting for the private sector to hire. Or you can lower taxes so people have more to spend/ pay down debts/ etc. Essentially the same concept.

This is not radical thinking, it's a fairly indisputable description of what happens during and after a recession.

When the government cuts spending there are real reductions in the deficit and in its future time integral, the debt. When the government raises taxes it simply feeds the appetite of the Congress to spend those funds in pursuit of future votes. Tax increases need to be part of the equation and, to generate significant funds they need to reach far below the $250K threshold. But if the preponderance of the deficit reductions do not come from spending cuts the reductions will soon evaporate into thin air and we will be back in this mess again and again, like in the movie Groundhog Day.

Barak Obama is little more than a demagogue who is opposed to deliberation. He accuses moderate and thoughtful opponents of weakness while exploiting a fundamental weakness in democracy: because ultimate power is held by the people, nothing stops the people from giving that power to someone who appeals to the lowest common denominator of a large segment of the population. The democrats in the U.S., led by one of the least humble men to ever occupy the White House, will lead us over the cliff while blaming the Republicans in a calculated appeal to the interests of that lowest common denominator.

Obama won the election, hello! Higher tax rate hikes on the wealthy was discussed in the 4 nationally tellivised debates. If Boehner calls Obama's bluff and we go over the fiscal cliff, it would cost the average familly 2K that is not pay as you go budgeted unlike a carbon tax. We earned the sunset of the W Bush tax cuts by waiting the required 10 years, and all Clinton era taxes are the worst case scenearo.

The truth is that the President, and even more so the democratic Senate, have zero interest in entitlement cuts. However much they might say they don't want middle-class tax raises, they don't want to cut spending even more. And there's simply no way our entitlements be financed just by higher taxes on the higher earners, the middle class is where the money is.

So the choice facing democrats is middle class benefits vs. middle class tax cuts. Yeah, there's no way they are going for a deal. High/Middle income is a meaningless distinction, it's about more government or less, and the mores are holding all the cards.

This song and dance is to pretend that they don't want taxes to go up, or to pretend that they didn't do it. It's to try to get their priorities and cover.

Our country would be better off with a grand bargain of letting the tax rates rise on high incomes/entitlement cuts. And I think a lot of people thought that was what they were voting for when they checked Obama. That was a mistake.

I think you give Obama far too little credit if you think he's not aware that entitlements (specifically Medicare) cannot be fixed from the revenue side alone. Given that spending cuts are inevitable, it's rather obvious that Obama would prefer that they happen under his watch than risk a future Republican President implementing his own preferred cuts.

Of course, the best solution for Obama would be to make the GOP propose those cuts for him. In the short-term, he would be able to claim that cuts to popular programs for the middle-class were the price that the nasty Republicans demanded for raising taxes on their rich friends, while in the long-term, fixing entitlements would go down as a major accomplishment for his legacy.

You will search in vain for *any* publicly spoken or published cuts to entitlements by a date certain by this White House, whether in 2011 or currently. Zero. No, third hand reports from "Senator/Rep said he believes ..." from somebody said to be in the room are not starting points of discussion for the budget of the US.

Contrast this, by the way, with calls for tax increases which are clearly published figures in any number of WH budgetary documents and called out specifically by the president in public engagements.

Which is my point. Anything leaked or reported third hand never has to be executed as part of negotiating. Instead it simply creates an image that the President is reasonable, willing to put things on the table.

The reality is nothing will ever be executed unless put in writing or spoken publicly first hand.